Chapter 46: Digital Payment Systems – NPCI (JAIIB – Paper 2)

1. Electronic Clearing Service (ECS) is primarily used for:

  • A. One-time debit card transactions
  • B. International remittances
  • C. Cash withdrawal at ATMs
  • D. Bulk and repetitive transactions such as salary, dividend, or utility bill payments
ECS is used for bulk and repetitive payments/receipts like salaries, pensions, dividends, and utility bills, ensuring efficiency and automation.

2. Which organization introduced Electronic Clearing Service (ECS) in India?

  • A. Ministry of Finance
  • B. Reserve Bank of India (RBI)
  • C. NABARD
  • D. NPCI
ECS was launched by the Reserve Bank of India in the 1990s to support electronic processing of bulk transactions.

3. A company wants to collect monthly subscription charges from 10,000 customers automatically from their bank accounts. Which ECS variant should it use?

  • A. ECS-Credit
  • B. RTGS
  • C. ECS-Debit
  • D. NEFT
ECS-Debit is used when a company collects payments from multiple customers, such as insurance premiums or utility bills.

4. In ECS Credit, who initiates the transaction?

  • A. The institution making bulk payments (e.g., employer, company)
  • B. Individual customer
  • C. RBI only
  • D. NPCI without mandate
In ECS Credit, the institution initiates bulk payments such as salaries, dividends, or interest to customers’ bank accounts.

5. Which system has largely replaced ECS in India to provide a more centralized and faster platform?

  • A. IMPS
  • B. NEFT
  • C. UPI
  • D. NACH (National Automated Clearing House)
NACH, operated by NPCI, has replaced ECS and provides centralized, faster, and more secure bulk transaction processing.

6. National Payments Corporation of India (NPCI) was established in which year?

  • A. 2005
  • B. 2008
  • C. 2010
  • D. 2012
NPCI was incorporated in 2008 as an umbrella organization for retail payment systems in India under the guidance of RBI and IBA.

7. NPCI is registered under which legal framework?

  • A. Banking Regulation Act, 1949
  • B. Negotiable Instruments Act, 1881
  • C. Companies Act, 1956
  • D. Companies Act, 2013 (as a Section 8 company)
NPCI is incorporated as a not-for-profit company under Section 8 of the Companies Act, 2013.

8. Which of the following is NOT an NPCI product?

  • A. RTGS (Real Time Gross Settlement)
  • B. UPI (Unified Payments Interface)
  • C. IMPS (Immediate Payment Service)
  • D. NACH (National Automated Clearing House)
RTGS is operated by RBI, not NPCI. NPCI operates UPI, IMPS, NACH, RuPay, BBPS, AEPS and other retail payment systems.

9. Unified Payments Interface (UPI) allows which type of transactions?

  • A. Card-to-card only
  • B. Cash deposits at branches
  • C. Instant fund transfer using Virtual Payment Address (VPA) linked to bank account
  • D. Cheque clearing transactions
UPI enables instant 24x7 fund transfer between bank accounts through a Virtual Payment Address (VPA) or QR code without requiring account details.

10. Bharat Bill Payment System (BBPS), managed by NPCI, is primarily designed for:

  • A. Cross-border remittances
  • B. Standardized bill payments across utilities and service providers
  • C. ATM withdrawals
  • D. Foreign exchange settlements
BBPS is an interoperable platform developed by NPCI for secure and standardized bill payments such as electricity, water, DTH, and telecom.

11. Which initiative launched in 2016 aimed to promote digital payments after demonetization?

  • A. Bharat Bill Payment System (BBPS)
  • B. Pradhan Mantri Jan Dhan Yojana
  • C. Digital India and BHIM App
  • D. National Financial Switch
The BHIM App (Bharat Interface for Money) was launched under the Digital India initiative in 2016 to promote UPI-based digital payments post demonetization.

12. DigiLocker, a flagship initiative of Digital India, is primarily used for:

  • A. Storing and accessing digital copies of official documents
  • B. Internet banking authentication
  • C. Cloud-based movie storage
  • D. Cryptocurrency trading
DigiLocker provides citizens with a secure cloud platform to store and access digital documents like Aadhaar, Driving License, and academic certificates.

13. Which digital initiative enables direct transfer of subsidies to beneficiaries’ bank accounts, reducing leakages?

  • A. UPI
  • B. RuPay Card
  • C. BBPS
  • D. Direct Benefit Transfer (DBT)
DBT ensures that subsidies and benefits are credited directly to the Aadhaar-linked bank accounts of beneficiaries, improving transparency.

14. Aadhaar Enabled Payment System (AEPS) is mainly used for:

  • A. International money transfer
  • B. Cash withdrawal and fund transfer using Aadhaar authentication
  • C. NEFT and RTGS transactions
  • D. Cheque truncation system
AEPS enables banking services like cash withdrawal, balance inquiry, and fund transfer using Aadhaar authentication at micro-ATMs.

15. Which government initiative promotes interoperability of digital payments by providing a common QR code for UPI, IMPS, AEPS, and RuPay cards?

  • A. eNAM
  • B. e-Sign
  • C. Bharat QR
  • D. FASTag
Bharat QR is a common interoperable QR code developed by NPCI, Visa, MasterCard, and AMEX to enable digital payments across platforms.

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